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Extract: 

On the revenue side, we foresee lower direct tax revenue from personal, corporate, petroleum, and real property gains taxes. Export duty and royalty payments from petroleum will likewise decrease as the oil and gas sector is in recovery mode. GST remains the Government’s fiscal lifeline: we project a GST collection of RM42bil to buoy Government revenue to RM223bil in 2017. Pakatan Harapan instead reverts to pre-GST numbers on consumption tax, yielding a smaller revenue of RM204bil.

On the expenditure side, we anticipate the Government’s commitment to a 3.1% debt-to-GDP ratio to involve austerity cuts. However, the Government’s propensity for high operating expenses is unlikely to waver considering their prodigal protocol habits and the growing civil-service headcount. Rather, we expect the Government to tighten the purse strings for development expenditure to the country’s detriment.

In contrast, Pakatan Harapan will tighten operating expenses with no change to emoluments but with spending cuts to ministries, particularly the Prime Minister’s Department. Following relatively cheap yet strict anti-corruption management practices, we project across-the-board savings of 20%. We will channel these savings towards national development, especially in the poorest states. By adopting prudent fiscal governance, we expect to narrow the debt-to-GDP ratio to 2.69%.